Facts of the Case

The assessee, Shri Yogi Satyam, is a spiritual teacher associated with Kriya Yog Ashram & Research Institute, Jhunsi, Allahabad, a non-profit organization engaged in spreading Kriyayoga. The Assessing Officer received information regarding substantial cash and bank deposits in the assessee’s bank accounts for Assessment Years 2012-13 to 2016-17. As no returns were originally filed, proceedings were initiated under sections 147 and 148 of the Income Tax Act, 1961.

During assessment, the Assessing Officer treated the excess of receipts over utilization as taxable income of the assessee and also made ad-hoc disallowances of cash withdrawals on the ground of incomplete vouchers. Assessments were completed under section 143(3) read with section 147. The National Faceless Appeal Centre partly sustained the additions, leading to further appeals before the Tribunal.

Issues Involved

  1. Whether surplus of receipts over expenditure received in a fiduciary capacity on behalf of a religious ashram can be taxed as personal income.
  2. Whether reopening of assessment merely on the basis of bank deposits was justified.
  3. Whether ad-hoc disallowance of cash expenditure was sustainable when utilization of funds was not disputed.
  4. Whether earlier appellate relief granted on identical facts should be followed applying the rule of consistency.

Petitioner’s Arguments

The assessee contended that all receipts deposited in the bank accounts represented voluntary donations and contributions received on behalf of Kriya Yog Ashram and were held in a fiduciary capacity. It was submitted that the assessee was not engaged in any business or profit-making activity and had not utilized any amount for personal benefit.

It was further argued that mere non-utilization of entire receipts during a particular year does not change the character of receipts. Reliance was placed on appellate orders for earlier years where identical additions under section 69A were deleted and on the binding judgment of the Allahabad High Court in CIT vs Bithal Das Modi, holding that amounts received in a representative or fiduciary capacity cannot be taxed as personal income.

Respondent’s Arguments

The Revenue relied on the assessment orders and contended that since the amounts were deposited in the assessee’s personal bank accounts and no separate balance sheet of the ashram was filed, the surplus was rightly treated as income. It was also argued that reopening was valid due to non-filing of returns and substantial bank deposits.

Court Order / Findings

The Tribunal observed that the authorities below had not disputed the fact that the receipts were utilized for the purposes of Kriya Yog Ashram and that the assessee was engaged solely in spiritual and teaching activities. It noted that similar additions made in earlier years on identical facts had already been deleted by the appellate authorities.

The Tribunal held that merely because the funds were routed through the assessee’s bank accounts, the surplus could not be treated as personal income when the assessee was acting only as a custodian or conduit. It further held that ad-hoc disallowance of cash expenditure was unjustified when the nature of activities and utilization of funds was accepted.

Relying on the principle of consistency and the binding precedent of the jurisdictional High Court in CIT vs Bithal Das Modi (276 ITR 517), the Tribunal deleted the additions and allowed the appeals of the assessee.

Important Clarification

The Tribunal clarified that receipts held in a fiduciary or representative capacity do not assume the character of taxable income merely due to temporary surplus or mode of deposit. Taxability must be determined based on the real nature and purpose of receipts, and consistency must be maintained when facts remain unchanged across assessment years.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770633398_YOGISATYAMALLAHABADVS.ITOWARD15ALLAHABAD.pdf

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